PACE: Financing for Hospitality Projects

How PACE Equity Works: A Hospitality Project Case Study

ABOUT THE PROJECT

The developers of a new hotel opted to incorporate PACE Equity funds into the project's capital stack. In doing so, plans for the hotel were moved forward with PACE Equity, while adding negligible construction costs. When construction broke ground in 2016, it marked the first time that a new construction project utilized the Property Assessed Clean Energy (PACE) financial instrument.

SOLUTION

PACE Equity contributed $6.8 million to the project, just over 10% of the hotel’s total development costs. PACE Equity worked for a year with energy engineers, the hotel’s architect, and development team throughout the design process to identify key components of the building’s planned infrastructure that could be leveraged to generate energy savings, without driving additional construction cost.

RESULTS

The hotel developers found PACE Equity to be an attractive source of long term funding due to the value it brings as both an investor and identifier of improvements in the hotel design. Specifically, the building owners noted that the following aspects of PACE were especially appealing:

• 10% of total development costs could be funded by PACE Equity, thus reducing outside equity requirements

• 20-year financing term

• Off-balance-sheet financing, which allowed the building owner to preserve borrowing capacity

• No personal guarantee; PACE relies on the value of the collateral and not personal credit

Hear more about this exciting hospitality new construction project funded by PACE from the project developer and PACE Equity's team:

Read more to learn about the financial benefits you could have through PACE.

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This PACE Equity customer was the first hospitality new construction project in the U.S. to utilize PACE for capital funding. The owners, energy engineers, PACE Equity, and the architect of the hotel worked on the energy modeling of the design to define savings, resulting in a projected 42% savings over baseline.

PACE Equity contributed $6.8 million to the project, just over 10% of the hotel’s total development costs.